What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-16 · 111 added, 86 removed, 162 unchanged (55% of the section changed)

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A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to 2022 can be found under Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.avisbudgetgroup.com.

In 2023, we saw strong volume as normal seasonality returned to our industry.

This coupled with revenue per day and inflationary pressures resulted in revenues of approximately $12.0 billion, net income of $1.6 billion and Adjusted EBITDA of $2.5 billion for the year ended December 31, 2023.

In 2024, we saw sustained volume, decreased revenue per day, and increased fleet and interest costs.

This resulted in revenues of approximately $11.8 billion, a net loss of $1.8 billion and Adjusted EBITDA of $628 million for the year ended December 31, 2024.

During the fourth quarter of 2024, we changed our fleet strategy to accelerate certain fleet rotations in order to decrease the age of our fleet for competitive reasons, and accordingly, we shortened the useful life associated with such vehicles.

Our net loss reflects $2.5 billion in long-lived asset impairment and other related charges, approximately $2.3 billion of which was recorded to reduce the carrying value of our rental fleet to its fair value in connection with this change.

See Note 2 – Summary of Significant Accounting Policies – Impairment of Long-lived Assets to our Consolidated Financial Statements.

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.

The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following:

interest rates, inflationary impact on items such as commodity prices and wages, disruption in the supply of new vehicles, used car values, and an economic downturn that may impact travel demand, all of which may be exacerbated by the ongoing military conflicts in the Middle East and Eastern Europe.

interest rates, inflationary impact on items such as commodity prices and wages, cost of new vehicles, used car values, increases in the number of personal injury claims and cost per incident, and an economic downturn that may impact travel demand, all of which may be exacerbated by ongoing military conflicts, including in Eastern Europe.

Additionally, uncertainty remains with respect to tariffs and tax regulations, and this uncertainty has had and may continue to have impacts on global stock markets and foreign exchange rates.

We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

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We present currency exchange rate effects to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations.

Currency exchange rate effects are calculated by translating the current-year results at the prior-period average exchange rate plus any related gains and losses on currency hedges.

Currency exchange rate effects are calculated by translating the current-period results at the prior-period average exchange rate plus any related gains and losses on currency hedges.

We assess performance and allocate resources based upon the separate financial information of our operating segments.

In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors.

We aggregate certain of our operating segments into our reportable segments.

In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the segments operate, and other relevant factors.

Management evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization;

any impairment charges;

long-lived asset impairment and other related charges;

restructuring and other related charges;

2 unchanged sentences

transaction-related costs, net;

charges for legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters;

legal matters, net, which includes amounts recorded in excess of $5 million, related primarily to unprecedented self-insurance reserves for allocated loss adjustment expense, class action lawsuits and personal injury matters;

non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees;

1 unchanged sentence

cloud computing costs;

other (income) expense, net, and income taxes.

other (income) expense, net;

severe weather-related damages in excess of $5 million, net of insurance proceeds;

and income taxes.

We have revised our definition of Adjusted EBITDA to exclude severe weather-related damages in excess of $5 million, net of insurance proceeds.

We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period.

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Early extinguishment of debt 19 5 14 n/m

Restructuring and other related charges 11 19 (8) (42 %)

Long-lived asset impairment and other related charges 2,470 — 2,470 n/m

Restructuring and other related charges 37 11 26 n/m

Transaction-related costs, net 3 5 (2) (40 %)

1 unchanged sentence

Total expenses $ 14,416 $ 10,094 $ 4,322 43 %

Income before income taxes 1,914 3,636 (1,722) (47 %)

Provision for income taxes 279 880 (601) (68 %)

Net income $ 1,635 $ 2,756 $ (1,121) (41 %)

Net income (loss) attributable to non-controlling interests 3 (8) 11 n/m

Net income attributable to Avis Budget Group, Inc.

$ 1,632 $ 2,764 $ (1,132) (41 %)

Income (loss) before income taxes (2,627) 1,914 (4,541) n/m

Provision for (benefit from) income taxes (810) 279 (1,089) n/m

Net income (loss) $ (1,817) $ 1,635 $ (3,452) n/m

Net income attributable to non-controlling interests 4 3 1 n/m

Net income (loss) attributable to Avis Budget Group, Inc.

$ (1,821) $ 1,632 $ (3,453) n/m

n/m Not meaningful.

Revenues for the year ended December 31, 2023 were consistent with the similar period in 2022, primarily due to a 5% increase in volume, partially offset by a 5% decrease in revenue per day, excluding exchange rate effects.

Total expenses increased 21% for the year ended December 31, 2023, compared to the similar period in 2022, primarily due to increased fleet costs, interest costs, and the impact of inflation .

Our effective tax rates for the years ended December 31, 2023 and 2022 were provisions of 14.6% and 24.2%, respectively .

Revenues decreased $219 million or 2% for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to a 3% decrease in revenue per day, excluding exchange rate effects and a $9 million negative impact from currency exchange rate movements, partially offset by a 1% increase in volume.

Total expenses increased 43% for the year ended December 31, 2024, compared to the similar period in 2023, primarily due to long-lived asset impairment and other related charges, higher per-unit fleet costs and higher interest costs.

See Note 2 – Summary of Significant Accounting Policies – Impairment of Long Lived Assets to our Consolidated Financial Statements.

Our effective tax rates for the years ended December 31, 2024 and 2023 were a benefit of 30.8% and a provision of 14.6%, respectively.

As a result of these items, our net income decreased by $3.5 billion compared to the similar period in 2023.

For the years ended December 31, 2023 and 2022, we reported earnings per diluted share of $42.08 and $57.16, respectively.

Operating expenses increased to 47.3% of revenue for the year ended December 31, 2023 compared to 44.1% during the similar period in 2022 , primarily due to cost inflation.

Vehicle depreciation and lease charges increased to 14.5% of revenue for the year ended December 31, 2023 compared to 6.9% during the similar period in 2022 , primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles .

Selling, general and administrative costs increased to 11.7% of revenue for the year ended December 31, 2023 compared to 11.2% during the similar period in 2022, primarily due to increased marketing costs and inflation .

Vehicle interest costs increased to 6.1% of revenue for the year ended December 31, 2023, compared to 3.4% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:

For the years ended December 31, 2024 and 2023, we reported diluted earnings (loss) per share of $(51.23) and $42.08, respectively.

Operating expenses increased to 51.0% of revenues for the year ended December 31, 2024 compared to 47.3% during the similar period in 2023, primarily due to an increase in volume.

Vehicle depreciation and lease charges increased to 25.2% of revenues for the year ended December 31, 2024 compared to 14.5% during the similar period in 2023, primarily driven by higher per-unit fleet costs;

adjusted depreciation on our rental fleet following a change in our fleet strategy, whereby we have accelerated certain fleet rotations and shortened the useful life associated with such vehicles;

and a decrease in the gain on sale of vehicles.

Selling, general and administrative costs were 11.5% of revenues for the year ended December 31, 2024 compared to 11.7% during the similar period in 2023.

Vehicle interest costs increased to 8.0% of revenues for the year ended December 31, 2024, compared to 6.1% during the similar period in 2023, primarily due to rising interest rates.

Following is a more detailed discussion of the results of each of our reportable segments, corporate and other, and reconciliation of net income to Adjusted EBITDA:

Revenues Adjusted EBITDA Revenues Adjusted EBITDA

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Total company $ 11,789 $ 628 $ 12,008 $ 2,490

Reconciliation of net income to Adjusted EBITDA

Net income $ 1,635 $ 2,756

Provision for income taxes 279 880

Income before income taxes $ 1,914 $ 3,636

Reconciliation of net income (loss) to Adjusted EBITDA

Net income (loss) $ (1,817) $ 1,635

Provision for (benefit from) income taxes (810) 279

Income (loss) before income taxes $ (2,627) $ 1,914

Non-vehicle related depreciation and amortization 237 216

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Early extinguishment of debt 19 5

Long-lived asset impairment and other related charges (b)

Restructuring and other related charges 37 11

Transaction-related costs, net 3 5

Other (income) expense, net (b)

Reported within operating expenses:

Cloud computing costs 35 10

COVID-19 charges, net — (9)

Legal matters, net 5 1

Other (income) expense, net (c)

Legal matters, net (d)

Cloud computing costs (e)

Severe weather-related damages, net (e)

Adjusted EBITDA $ 628 $ 2,490

(a) Includes unallocated corporate overhead which is not attributable to a particular segment.

(b) Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

(a) Includes unallocated corporate expenses which are not attributable to a particular segment.

(b) Includes an impairment charge of approximately $2.3 billion related to the acceleration of the rotation of our fleet and a charge of $180 million related to the write-down of the carrying value of certain vehicles held for sale within our Americas reportable segment.

See Note 2 – Summary of Significant Accounting Policies – Impairment of Long-Lived Assets to our Consolidated Financial Statements.

(c) Primarily consists of gains or losses related to our equity method investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

(d) Includes $4 million reported within selling, general and administrative expenses for the year ended December 31, 2024 and $60 million and $5 million reported within operating expenses in the years ended December 31, 2024 and 2023, respectively.

The $60 million recorded within operating expenses for the year ended December 31, 2024 includes $46 million relating to our self-insurance reserves for allocated loss adjustment expense.

(e) Reported within operating expenses.

2024 2023 % Change

Revenues $ 9,111 $ 9,347 (3 %)

Adjusted EBITDA $ 2,196 $ 3,660 (40 %)

Revenues decreased 1% for the year ended December 31, 2023 compared to the similar period in 2022 , primarily due to a 6% decrease in revenue per day, partially offset by a 5% increase in volume.

Operating expenses increased to 47.4% of revenue for the year ended December 31, 2023 compared to 43.8% during the similar period in 2022, primarily due to cost inflation.

Vehicle depreciation and lease charges increased to 13.0% of revenue for the year ended December 31, 2023 compared to 4.4% during the similar period in 2022, primarily due to increased per-unit fleet costs, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles.

Selling, general and administrative costs were approximately 9.6% of revenue for the year ended December 31, 2023, consistent with the similar period in 2022, primarily due to increased marketing costs, offset by a decrease in other selling, general and administrative costs .

Vehicle interest costs increased to 6.6% of revenue for the year ended December 31, 2023 compared to 3.7% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.

Adjusted EBITDA decreased 40% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures.

Adjusted EBITDA 551 2,196 n/m

Revenues decreased for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to a 3% decrease in revenue per day, excluding exchange rate effects and a $8 million negative impact from currency exchange rate movements, partially offset by a 1% increase in volume.

Operating expenses increased to 51.2% of revenues for the year ended December 31, 2024 compared to 47.4% during the similar period in 2023, primarily due to an increase in volume.

Vehicle depreciation and lease charges increased to 25.3% of revenues for the year ended December 31, 2024 compared to 13.0% during the similar period in 2023, primarily driven by higher per-unit fleet costs;

adjusted depreciation on our rental fleet following a change in our fleet strategy, whereby we have accelerated certain fleet rotations and shortened the useful life associated with such vehicles;

and a decrease in the gain on sale of vehicles.

Selling, general and administrative costs were 9.5% of revenues for the year ended December 31, 2024 compared to 9.6% during the similar period in 2023 .

Vehicle interest costs increased to 8.6% of revenues for the year ended December 31, 2024 compared to 6.6% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet costs, interest costs, and a $2 million negative impact from currency exchange rate movements.

International

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Revenues $ 2,678 $ 2,661 1 %

Adjusted EBITDA $ 400 $ 560 (29 %)

Revenues increased 6% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to a 6% increase in vo lume and a $25 million positive impact from currency exchange rate movements, partially offset by a 1% decrease in revenue per day, excluding exchange r ate effects .

Operating expenses increased to 45.6% of revenue for the year ended December 31, 2023 compared to 44.3% during the similar period in 2022, primarily due to cost inflation.

Vehicle depreciation and lease charges increased to 19.7% of revenue for the year ended December 31, 2023 compared to 16.4% during the similar period in 2022, primarily due to increased per-unit fleet costs, excluding exchange rate effects, driven by increased fleet levels and increased depreciation rates .

Selling, general and administrative cost s increased to 15.4% of revenue for the year ended December 31, 2023 compared to 15.0% during the similar period in 2022, primarily due to increased marketing costs and inflation .

Vehicle interest costs increased to 4.4% of revenue for the year ended December 31, 2023 compared to 2.2% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles .

Adjusted EBITDA decreased 29% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures.

Adjusted EBITDA 161 400 n/m

Revenues increased for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to a 4% increase in volume, partially offset by a 3% decrease in revenue per day, excluding exchange rate effects and a $1 million negative impact from currency exchange rate movements.

Operating expenses increased to 48.3% of revenues for the year ended December 31, 2024 compared to 45.6% during the similar period in 2023, primarily due to an increase in volume.

Vehicle depreciation and lease charges increased to 25.2% of revenues for the year ended December 31, 2024 compared to 19.7% during the similar period in 2023, primarily due to increased per-unit fleet costs, increased depreciation rates, and a decrease in the gain on sale of vehicles.

Selling, general and administrative costs were 15.3% of revenues for the year ended December 31, 2024 compared to 15.4% during the similar period in 2023.

Vehicle interest costs increased to 5.7% of revenues for the year ended December 31, 2024 compared to 4.4% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs, and a $13 million negative impact from currency exchange rate movements.

Corporate and Other

2024 2023 % Change

Revenues $ — $ — n/m

Adjusted EBITDA $ (106) $ (87) (22 %)

n/m Not meaningful.

Adju sted EBITDA decreased 22% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher selling, general and administrative expenses related to computer technology transformation costs, which are not attributable to a particular segment.

Adjusted EBITDA (84) (106) n/m

Adjusted EBITDA increased for the year ended December 31, 2024 compared to the similar period in 2023, primarily due to decreased selling, general and administrative expenses, which are not attributable to a particular segment.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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Stockholders’ equity (2,317) (343) (1,974)

The increase in assets exclusive of assets under vehicle programs compared to 2022 is principally related to the increase in operating lease right-of-use assets, deferred income taxes, other current assets and property and equipment.

See Note 3 – Leases, Note 9 – Income Taxes, Note 10 – Other Current Assets and Note 11 – Property and Equipment, net to our Consolidated Financial Statements.

The increase in assets exclusive of assets under vehicle programs compared to 2023 is principally related to the increase in operating lease right-of-use assets.

See Note 3 – Leases to our Consolidated Financial Statements.

The increase in liabilities exclusive of liabilities under vehicle programs compared to 2023 is principally related to the increase in operating lease liabilities and corporate indebtedness from the issuance of senior notes.

See “Liquidity and Capital Resources,” Note 3 – Leases and Note 13 – Long-term Corporate Debt and Borrowing Arrangements to our Consolidated Financial Statements.

The increases in assets and liabilities under vehicle programs are principally related to the increase in the size and cost of our vehicle rental fleet to meet demand.

The increase in stockholders’ equity compared to 2022 is principally related to comprehensive income, partially offset by our share repurchase activity.

The decreases in assets and liabilities under vehicle programs are principally related to the decrease in the size and value of our vehicle rental fleet.

The decrease in stockholders’ equity compared to 2023 is principally related to our comprehensive loss.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.

In July 2023, we issued €400 million of 7.250% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually.

In September 2023, we used net proceeds from the offering primarily to redeem all of the €300 million of our outstanding 4.125% euro-denominated Senior Notes due 2024 plus accrued interest.

In November 2023, we issued $500 million of 8.000% Senior Notes due February 2031, at 99.3% of face value, with interest payable semi-annually.

Net proceeds were used to fully redeem our 4.500% euro-denominated Senior Notes due 2025 and a portion of our outstanding balance on our Term Loan due 2029, with the remainder being used for general corporate purposes.

During 2023, our Avis Budget Rental Car Funding (AESOP) subsidiary issued approximately $3.9 billion of asset-backed notes with expected final payment dates ranging from October 2026 to February 2029, and a weighted average interest rate of 5.81%.

In January 2024, AESOP issued $1.2 billion of asset-backed notes to investors with an expected final payment date of June 2029 and a weighted average interest rate of 5.51%.

In February 2024, we issued €600 million of 7.000% euro-denominated Senior Notes due February 2029, at par, with interest payable semi-annually.

In April 2024, we used net proceeds from the offering to redeem all of our outstanding 4.750% euro-denominated Senior Notes due January 2026 plus accrued interest, with the remainder being used for general corporate purposes.

In May 2024, we issued an additional €200 million 7.250% euro-denominated Senior Notes due July 2030, at 100.25% of their face value, with interest payable semi-annually.

Net proceeds from the offering were used for general corporate purposes.

In September 2024, we issued $700 million of 8.250% Senior Notes due January 2030, at par, with interest payable semi-annually.

In October 2024, we used net proceeds from the offering to repay the outstanding borrowings under our floating rate term loan due 2029, with the remainder being used to repay maturing vehicle-backed debt and for general corporate purposes.

In February 2025, we borrowed $500 million under a floating rate term loan due December 2025, which is part of our senior revolving credit facilities.

During 2024, our Avis Budget Rental Car Funding (AESOP) subsidiary issued approximately $2.8 billion of asset-backed notes with expected final payment dates ranging from February 2026 to December 2029, and a weighted average interest rate of 6.04%.

Avis Budget Rental Car Funding (AESOP) has also amended and extended its asset-backed variable-funding financing facilities, most recently in December 2024.

The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.

In December 2023, we paid a special cash dividend of $10.00 per share to all holders of our common stock as of December 15, 2023, totaling approximately $355 million.

Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023.

Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Exchange Act.

In January 2025, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued an additional $358 million of asset-backed notes to investors with expected final payment dates ranging from August 2027 to February 2029 and a weighted average interest rate of 8.01%.

These notes were issued under previously outstanding series of debt.

The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.

In February 2024, we amended our European rental fleet securitization program to increase its capacity from €1.7 billion to €1.9 billion, to add £200 million to our capacity within the program, and to extend the maturity of the program from 2024 to 2026.

The program is used to finance fleet purchases for certain of our European operations.

Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors.

The repurchase program may be suspended, modified or discontinued at any time without prior notice.

The repurchase program has no set expiration or termination date.

For the year ended December 31, 2023, we repurchased approximately 4.3 million shares of common stock at a cost of approximately $889 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the program.

As of December 31, 2023, approximately $802 million of authorization remained available to repurchase common stock under the program.

The Stock Repurchase Program may be suspended, modified or discontinued at any time without prior notice.

The Stock Repurchase Program has no set expiration or termination date.

For the year ended December 31, 2024, we repurchased approximately 0.6 million shares of common stock at a cost of approximately $45 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the Stock Repurchase Program.

As of December 31, 2024, approximately $757 million of authorization remained available to repurchase common stock under the Stock Repurchase Program.

Year Ended December 31, 2024 vs.

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The decrease in cash provided by operating activities during 2024 compared with 2023 is primarily due to the decrease in our net income.

The increase in cash used in investing activities during 2023 compared with 2022 is primarily due to the increase in our net investment in vehicles.

The increase in cash provided by financing activities during 2023 compared with 2022 is primarily due to the increase in our net borrowings under vehicle programs and the decrease in our common stock repurchases, offset by the increase in our payments of corporate borrowings.

The decrease in cash used in investing activities during 2024 compared with 2023 is primarily due to the decrease in our net investment in vehicles.

The increase in cash used in financing activities during 2024 compared with 2023 is primarily due to the increase in our net payments under vehicle programs, partially offset by the decrease in our common stock repurchases and the increase in our net corporate borrowings.

We anticipate that our non-vehicle property and equipment additions will be approximately $225 million in 2025.

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Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or the absence of a recovery or worsening of the United States and worldwide economies, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally.

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions, a worsening of the United States and worldwide economies or by increases in interest rates, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally.

We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings.

Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market (see Part I, Item 1A, “Risk Factors” for further discussion).

As of December 31, 2023, we had access to $555 million of available cash and cash equivalents and available borrowings under our revolving credit facility of approximately $261 million, providing us with access to an approximate $816 million of total liquidity.

Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs, including due to a decrease in the fair value of our fleet, under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market (see Part I, Item 1A, “Risk Factors” for further discussion).

As of December 31, 2024, we had $534 million of available cash and cash equivalents and access to $503 million of available borrowing capacity under our revolving credit facility, providing us with access to approximately $1.0 billion of total liquidity.

Including our uncommitted facilities, we had total liquidity of approximately $1.1 billion.

Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings.

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Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control.

If there is a significant unfavorable change to current conditions, it could result in a material

adverse impact to our consolidated results of operations, financial position and liquidity.

If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity.

We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time.

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Our goodwill and other indefinite-lived intangible assets are allocated among our reporting units.

During 2023, 2022 and 2021, there was no impairment of goodwill and other intangible assets.

See Note 7 – Intangible Assets to our Consolidated Financial Statements.

For our Europe, Middle East and Africa (“EMEA”) reporting unit, the percentage by which the estimated fair value exceeded the carrying value as of October 1, 2023 was approximately 14% and the amount of goodwill allocated to our reporting unit was approximately $460 million.

We will continue to closely monitor actual results versus our expectations, as well as any significant changes in events or conditions, and the resulting impact to our assumptions about future estimated cash flows, the discount rate and market multiples.

In the future, failure to achieve our business plans, a significant deterioration of the macroeconomic conditions of the countries in which we operate, or significant changes in the assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets (such as the discount rate) could result in significantly different estimates of fair value that could trigger an impairment of the goodwill of our reporting units or intangible assets.

During 2024, we recorded $28 million in long-lived asset impairment and other related charges for impairment of one of our unamortized indefinite-lived intangible assets.

During 2024, there was no impairment of goodwill.

During 2023, there was no impairment of goodwill and other indefinite-lived intangible assets.

See Note 2 – Summary of Significant Accounting Policies and Note 7 – Intangible Assets to our Consolidated Financial Statements for more information regarding our goodwill and other indefinite-lived intangible assets.

We present vehicles at cost, net of accumulated depreciation, on the Consolidated Balance Sheets.

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Differences between actual residual values and those estimated result in a gain or loss on disposal and are recorded as part of vehicle depreciation and lease charges, net, at the time of sale.

See Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements.

During 2024, we recorded $2.5 billion in long-lived asset impairment and other related charges related to vehicles, including an approximately $2.3 billion impairment charge related to the acceleration of rotation of our fleet and shortened useful life associated with such vehicles.

During 2023, there was no long-lived asset impairment and other related charges.

See Note 2 – Summary of Significant Accounting Policies and Note 8 – Vehicle Rental Activities to our Consolidated Financial Statements for more information regarding our vehicles.

For a discussion of risk factors and assumptions relative to our vehicle valuations, refer to Item 1A, “Risk Factors”, included under Part 1 of this Annual Report on Form 10-K.

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In the event we were to determine that we would be able to realize deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Currently we do not record valuation allowances on the majority of

our tax loss carryforwards as there are adequate deferred tax liabilities that could be realized within the carryforward period.

Currently we do not record valuation allowances on the majority of our tax loss carryforwards as there are adequate deferred tax liabilities that could be realized within the carryforward period.

See Note 2 – Summary of Significant Accounting Policies and Note 9 – Income Taxes to our Consolidated Financial Statements for more information regarding income taxes.

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The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents for which we are ultimately liable and changes in the cost per incident.

See Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements.

See Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements for more information regarding public liability, property damage and other insurance liabilities.

Adoption of New Accounting Pronouncements

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis